Kyle and I received an excellent undergraduate education a private college – a very, very expensive private college (it’s on this list). Our college was an absolutely perfect choice for me. There are only around three institutions in the country that offer a similar educational setting and none are in nearly as desirable a location. For my personality, my academic interests, and my career aspirations – and my love of warm weather – it was very well-suited.

In terms of the debt that we incurred (about $17k in federally subsidized student loans for me, zippo for Kyle) this education was a total steal. Strictly by the numbers, our college has appeared at or near the top of the starting and mid-career salary rankings for college graduates for the last several years. If we’re typical, we’re going to make a very decent living and we’re starting our life off with very little of the deadweight that hampers many graduates.

Does this sound braggy? I’m not promoting myself – I didn’t know all that going in. I believe I made a shockingly good choice when I was seventeen in applying and committing to my college. My parents were the ones who enabled me to attend by paying for my education.

This is where my ambivalence comes in. While I did get a partial merit scholarship, had two work-study jobs, and took out a few student loans, my parents paid for the majority of the sticker price of tuition and room and board. And by “paid for” I mean “financed largely with debt.”

As I’ve become more immersed in the personal finance world, my attitude toward debt has become no-tolerance. The idea of my parents taking out massive loans to send me to my dream school makes me feel both supremely appreciative and supremely guilty. My parents aren’t the greatest at money management, I realize now. Paying for my education must be taking a big chunk out of their financial stability and future standard of living.

I can’t change the past. I’m glad my parents paid for such a great education. But as Kyle and I look forward to having children and saving for their educations, I have to ask myself – would I do the same? Books like Debt-Free U(affiliate link – thanks for using!) have made me think it’s ridiculous to pay for private college when public universities provide a similar product at a vastly discounted rate. (Bissonnette even goes so far as to encourage students to get an associate’s degree at a community college before finishing up at a public 4-year institution, which I do not agree with.) Studies of graduates cited by Bissonnette show that post-college performance depends much more on the student’s intrinsic abilities rather than if they attended an elite college.

So if my child gets into her dream (private) school without much financial aid and also our state’s flagship public university (Berkeley, most likely, if we’re living in CA), how do we guide her? And, more immediately, how much money should we save? Do we cut off the possibility of private school for our child (barring scholarships) by saving only enough to fund a public school education? Or do we over-save to leave that possibility open? And how do we have any idea what college will cost by then?

I haven’t mentioned Kyle’s parents to this point. The reason he doesn’t have student loans is because they just straight up paid for school out of pocket. They had savings for some other purposes (a couple new cars, I believe, in his first year) that they just sacrificed to devote the money to his education. The fact that they positioned themselves financially to be able to do that, when tuition and room and board were more than $40k/year, gives me hope that perhaps we could do the same if we planned for it (assuming that tuition does not keep increasing exponentially).

The degree and transcripts that leave with you from college are only a small fraction of what that experience gives you. How in the world do we translate the worth of college to dollars? The quality of the classes makes an impact, the connections a student makes with professors makes and impact, the employment opportunities opened up by the program or school makes an impact, how supportive the school is of a student in a particular major makes an impact, and the intelligence, enthusiasm, and interests of the peer group makes an impact – and these are just the direct factors! Was my experience in college really worth 2.5 times what it would have been at my home state’s premier public university?

My point here isn’t to bash public universities. The vast majority of people in my PhD program went to public universities. (Anyway, I believe the bigger divide is between colleges and universities, not private and public institutions.) My point is that my parents enabled me to go to the institution of higher education that was absolutely perfect for me, and I’m just not sure if I would do the same for my children if the price tag is high.

I have a feeling this topic is going to come up more than once on this blog because my thoughts are so unsettled on it.

P.S. In case anyone is wondering. Kyle is an only child, but I have two younger siblings (both currently enrolled in community college). And my parents have paid off the loans they undertook for my education.

Do any other private-college kids want to weigh in – did you family use cash, loans, or (true) financial aid? Those with children, are you planning for public or private college for them?

My best friend went to private school. His tuition for one year was almost as much as I paid for 5 years of public school education.

I believe that the quality of education is more dependent on the student than the school. I went to a great school. Even though it was a small state college, it did have students from all 50 states and more than a dozen countries. For the field I originally started studying (education), it was #1 in the region. Having the letters TCNJ on your diploma was pretty much a guarantee of a job offer at a school.

And I didn’t take up a single one of the hundreds of opportunities around me there.

Great point that the strength of a certain program is very important – IF you know what you want to major in! One issue I had in applying for college was that I wasn’t sure if I wanted to major in physics or engineering, which at my state’s public university were housed in different schools so switching would not have been trivial. At the college I attended there was an extensive core curriculum of science and engineering required for everyone for the first three semesters, after which we declared majors, so I knew I would have a lot of time and exposure to decide on a discipline.

I agree that massive debt for a not-very-marketable degree is likely not worth it, but maybe less so if no debt was taken out? I guess I have a bit of a romantic image of the liberal arts education still. My BS is somewhat useless in itself without a PhD but it opens doors to other fields.

The other thing to consider is the “name brand” of the school. If you went to Harvard, that holds some cache no matter the major. My college has a very good reputation among those who have heard of it, but not a strong reputation outside CA among non-scientists/engineers.

My current university is name brand and I’m a little relieved that I will have that to rely on in the future after the hit-and-miss reactions I get with my college. So it does raise the question – if the university/college is “good enough” maybe the expense is more justifiable?

I went to a private, expensive college. And, like you, I truly value the experience I had. I also think that some of the value of my experience was that my parents didn’t pay for me to attend. Sure, they didn’t kick me out at 18 and forget about me; they often paid for plane tickets home for the holidays, helped with all my initial moving expenses, and I had the security of knowing that if things got really bad they’d be there to help out. Instead of paying for my school, my parents instilled in me very early on a saving mentality–at least 50% of any money I ever made or was given went in to savings “for college” for as long as I can remember. They encouraged me to earn good grades and be involved in the community so I would be competitive for scholarships (I was and received significant merit based scholarships from my school and from outside sources). I worked throughout college at work study jobs and as a TA, learning valuable time management, life skills, and the true value of a few drinks at a bar. I did have to take out about $33,000 in loans (which for the record is far less than cost of attendance for a single year)–$24,000 subsidized and currently in deferral, $6,000 from my grandparents so I could study abroad (another experience I highly value), and $4,000 unsubsidized; I paid back all of the unsubsidized loans in my first year of graduate school and will be able to pay back most, if not all, of the rest of the loans when I graduate in a few years (or forever, at my current rate). So I guess my point is that you can still “help” your children attend college and teach them financial responsibility without financing their whole college experience.

What a wonderful story and thank you for your perspective! You are so right that there are more parental roles than just taking on debt or paying on behalf of the child. I’m so glad you were able to have your college experience and come out with a manageable amount of debt. And overall it sounds like the financial impact on your family was less than even for attending some public schools without financial aid. I wish my parents had been as proactive as yours in teaching me the value of money and how to best manage it and I hope I will parent more like yours in this respect.
I also am very glad I had my two small jobs during college – both for time management and work experience. Actually in my last year my parents decided to stop paying for my food (just tuition and room) so I got a little practice in budgeting and cooking earlier than I would have otherwise.

I might also add that being financially responsible for my own education made me fully appreciate my academic experience. I definitely knew some kids who felt more entitled to be at my school (perhaps its wrong of me to assume that all of their parents were funding their education, although some I know were) and didn’t take full advantage of their opportunities; maybe they would have if they had felt a little more ownership of their experience? Who knows.

I went to a public university and I loved it. My parents took out about $60K in student loans to send me there which I didn’t appreciate nearly as much as I do now. They paid it for about 8 years but when my dad passed away last year, the rest of the loans were forgiven – something I was very thankful for because they were becoming a burden on my mom.

I took out about $40K for grad school and I really shouldn’t have. I didn’t need nearly as much but I just took all the loans that were offered to me. I’m regretting that now.

Very sorry to hear about your father. I didn’t realize loans were forgiven upon death of a co-applicant but in any case that is quite a relief.

I guess student loan recommendations is an example of anchoring, right? Most everyone I know who finances grad school with loans takes out the max amount too (and spends it), whether or not it’s needed.

My family scrimped and saved my entire life so we could go to the (private) colleges of our choice. Mine ended up being less expensive than they expected (mega financial aid!), and my sister’s was about as expensive as expensive, so they came out ahead. We plan to make sure our children can go anywhere they can get in without regard to finances too. (Though a high quality public is better than a low quality private, I would definitely encourage our kids to check out the Claremonts…)

Great job for your parents on planning and saving for the private education – and experiencing the bonus of over-saving! Sort of like a tax refund. 🙂 Did they save in 529s or similar tax-advantaged accounts, and if so how was that affected by the over-saving? Same question to you – are you using education-specific accounts or a combo?

I’ve been seeing various ones of the Claremont Colleges (not just Pomona!) topping various college lists recently, like happiest students – I’m glad they’re getting more and more press. Although they are great schools, I’m not sure I would want my kid to go to one especially if we are living in southern California as we plan to by then. I sort of want them to go further afield and discover a new area like I did. 🙂

529s didn’t exist back then. I’m not sure if they used a Coverdell or not, I think so, but that was only a small portion of college costs. Instead we got some tax rebates that no longer exist for education expenses.

We make a lot more than my parents ever did, so we’re fairly sure that we’ll be on the hook for a large portion of full tuition. So we’re saving in 529s at the rate of $500/month since #1 was born. I suppose we’ll up that to $1000/month when #2 is born.

I went to a private school that my parents helped pay for. I think it was the right education for me, but it wasn’t too expensive.

I am applying to MBA program now and I am applying to one public school (Pitt) and one private school (Carnegie Mellon). Carnegie Mellon is about twice the cost of Pitt, but it is the absolute ideal school for me. Pitt is a good program, but I am looking for a program with more of a national reputation. I’ve looked a lot into paying the extra cost for a top tier school and from what I’ve found, it pays for itself in a short period of time.

I went to a large public university for my undergraduate and graduate degrees. But a lot of my friends went to private schools like Haverford, Swarthmore, Sarah Lawrence, or Grinnell. After hearing about their experiences, I would love it if my son attended a similar school – he can always head to a bigger school for his graduate degree.

Right now, I have $79,000 in student loans (acquired over a BA, BS, MS, and PhD). What I don’t typically share is that $28,000 of that is from sending my son to a private elementary school for four years. He received a half-scholarship, but the rest we had to come up with. As a grad student, I elected to take out additional loans to finance his education. Was it worth it? Definitely. He just blossomed there, and I think it’s set him up to be really successful in high school.

Student loans are not inherently evil. But if you opt to take out loans for education, you must weigh the costs and benefits. For me, these were well worth it.

I think it’s a great idea to go to a college for an undergraduate degree and a university (of course) for a graduate degree. That’s really taking advantage of the purposes of the different types of institutions and getting a more varied experience. There are lots of advantages that my current university has over my college, but I appreciate them as a graduate student more than I would have as an undergraduate.
Very courageous choice to take out additional student loans for your son to go to private school. I hope he (will) appreciates your sacrifices!

I actually went to a private undergrad school and a public school for my MBA. Personally, I don’t have any issues with debt as long as you’ve done the cost-benefit analysis and have decided that there is enough of an ROI to make it worth it, given the risks. As far as whether your school matters, in some industries and locations, it certainly does, but in others not so much. And I think that the part of the country you’re in matters a lot too. Harvard doesn’t have the pull out west that it does in New York. But the west is generally more laid back and less name-focused than the east to begin with.

The tough thing is really how to do the cost-benefit analysis, I think! Especially for a 17- or 18-year-old child who doesn’t really know where he or she is going to end up after college. I mean, at my current university, I can’t even tell you the enormous percentage that label themselves pre-med in their freshman year and then at least half of them switch to another track.
Maybe I’m so name-focused because I’m from the East Coast! I’m glad we’re planning to move back to an area of the country where our college has a strong reputation, though, in addition to staying in the core industries.

No doubt it’s difficult to do a CBA, and you’re right when people change majors or simply don’t know what they want to do it makes it much more difficult. I think it would actually be better for most people to work for a year or two after high-school prior to college to get that figured out. Unfortunately, that doesn’t seem to be how our system really works.

I went to a private school for undergrad school. I chose it because it offered a program I wanted to study, it offered very small class sizes, and it was cheap – meaning I could live at home. So, what we paid extra in tuition we paid made up for with living expenses. My parents paid for it, which I appreciate very much. In my view, they gave me something now that I could use to better my life, rather than saving it as an “inheritance” someday. Of course, they could afford to do that. i would never advocate a parent going into debt for their child’s education if there are cheaper options available. I paid for my master’s Degree on my own with no debt, but there were a couple lean years in the process. 🙂

That’s another possibility – that private school can be less expensive overall due to living considerations or scholarships. Great point that spending money on college can improve your life in a different way that simply giving cash later.
Congrats on doing your master’s debt-free!

I think I would have turned out differently. I doubt I would be pursuing my PhD as that wasn’t my aspiration before entering college. And for sure I would have met different people i.e. not my husband. 🙂

Congrats on paying off the your wife’s loan!
My husband and I are both in PhD programs, so barring something crazy happening we will obtain those degrees in the next few years. I don’t really know how much money we’ll make with the degrees – I guess it depends on what “high” means to you! I probably won’t stay in research and might go for something much lower-paying, like writing.
I agree that my parents’ sacrifice might mean that I “owe” them. Of course we would help them out if they need it during retirement, but how to know what their needs our vs. our needs I imagine will be very difficult. The good thing about loans is that once you pay them off it’s over, unlike familial obligations. Of course, even if my parents hadn’t paid for college for me, I would feel indebted to them for raising me.
I agree with you that you need to take care of your and your wife’s future before being concerned about your children’s college.
Thanks for your comment!

Emily – Have you looked into the best ways to save for your children’s education so as not to jeopardize financial aid potential? Personally I’d rather pay my fair share, rather than relying on financial aid of course. But the way the system is rigged…. it’s almost as if the price is so high that those who are responsible and save actually seem to pay much more than their fair share.

I hate to be a conspiracy theorist… But I’ve heard this concern expressed before and was wondering if you had done research into this area.

Debt-Free U addresses this a bit… The only thing I remember is that finaid doesn’t look at retirement savings. I’m not sure if there are other assets that are ignored – maybe primary residence?? Who knows what financial aid will look like in 20-some years though.
I think I’d rather pay the fair share as well, minus any possible scholarships.

I attended private school for college and actually ended up paying less for 4 years of school then I would have paid at my local state school. But I realize I’m probably an exception to the “rule”. I was lucky to get scholarships and only ended up taking out subsidized loans that I was able to pay off quickly. If I have kids I’d definitely want to help them pay for school (but would certainly encourage them to attend a school that was affordable). Some of my friends from undergrad have over $120k in student loan debt. Talk about a bad way to start off your financial life as an adult.

So awesome that you got that great deal on school! It’s crazy how people pay such different prices at the exact same school. Colleges and plane flights – exceptions to the general American culture of one price for everyone!

[…] just have to brag for a second. Remember when I got all angsty about the price of my private undergraduate education? Well, according to Business Week, at least I made a good choice of hugely expensive college. […]

[…] Paying for college: As I’ve written about before, our parents paid for the bulk of our very expensive college costs; Kyle graduated from college without debt and I had only $16,000 in student loans. That gave us a […]

Yea, the typical Mustachian would probably say why go to a private school for $$$$ when a public school is so cheap by comparison? But these are the values that my parents instilled in me, and I tend to agree with them.

It’s certainly a good question as to how I’ll pay for that. I plan on paying for it out of my investment portfolio just like any other expenses. The trick is figuring out how much to save.

The amount to save will depend on the FAFSA rules at the time (but of course, I’m probably going to have to start saving many years before these hypothetical kids go to college, so I probably won’t be able to plan based on FAFSA rules). As it is written currently, it is possible to force the EFC on FAFSA to ignore ALL assets by filing a 1040A (one of the most notable things you cannot report on a 1040A is capital gains/losses from sales of stocks/mutual funds/ETFs/etc. – whereas capital gains distributions are allowed) and having an AGI less than $50k. In this situation, only income is assessed for the EFC. An early retiree can very easily control his or her income, that’s easily attainable.
Furthermore, if you meet the above conditions and have income below $24k, then the EFC is just forced to zero. I think the FAFSA definition of income included Roth IRA distributions? I’m not sure. If that’s the case, then this will be pretty hard to achieve.

I may use 529s for their tax free growth, but if the long term capital gains rate stays at 0% for the 15% marginal or lower brackets, then it may not necessarily make sense to use 529s.
I have also considered using I Bonds for their tax advantages for educational use, but I won’t really consider it unless their fixed rates are substantially above zero.